Investigating the replacement of old passenger cars with modern less emission intensive cars in Sweden using Total Cost of Ownership approach

Sammanfattning: Purpose. In Sweden, private commuting accounts for two third of total transportation emissions and 21% of the country’s total. To become net-zero by 2045, Sweden plans to have 2 million electric cars on the roads by 2030. Whereas with current pace, there will be 1 million electric cars by the end of the decade. Cars registered before 2016 (referred to as old cars in the study) make up nearly half of the Swedish car fleet. Thus, replacing the old emission intensive cars with the modern lower or zero emission cars will catalyze the decarbonization of Swedish transport sector. Therefore, the purpose of this study is to probe if it is economical to keep using an old car in the future or to replace it with a new one. Methods. This study first compares the next 13-year Total Cost of Ownership (TCO) of old V70 (having current milage 200,000 km) with that of new replacement cars. The (selected) replacement are the most registered modern-day cars in Sweden by fuel type having same size as that of V70: V60 (ICE), V60 (PHEV) and Tesla Model 3 (BEV). Moreover, using TCO framework, the study also estimates if the replacement is more economical now or sometime in the future with either new replacement cars or their (4-year) used models. Results. The results show that for next 13-years in Sweden, it is more economical to replace the old V70 with any of the replacement cars. However, Tesla Model 3 is the cheapest option among the new cars and V60 (PHEV) among the used cars. Overall, it is more economical to replace with a used car. In addition, the replacement is most economical if done immediately (in 2022) and gets more expensive by each year of delay- because the owner will have to incur relatively higher V70 costs (vis-à-vis the replacement cars) for an additional year. Sensitivity analysis shows that with higher current salvage value, a V70 gets more expensive to own in next 13 years (due to higher depreciation) whereas the replacement becomes cheaper (utilizing higher salvage value to buy the replacement car). Discussion. The study can be expanded to suggest economical and emission efficient replacement options for other old cars to accelerate the decarbonization of Swedish private transport sector. Furthermore, this study was done in collaboration with Mekonomen Group to see the financial worth of old ICE car replacement by its customers. The study results reinforce the group’s diversification strategy from ICE cars-oriented business model to BEVs as the top focus. Finally, this study is based on the assumption that the total number of cars in Sweden will not increase in future- the old gets replaced by the new. Therefore, from a holistic perspective, the study discusses that a sustainable transportation model should move away from private ownership towards shared mobility to avoid the rebound effects of technological efficiency that increase the overall resource consumption.